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The expenses are not deducted, they are added to the basis of the property when calculating capital gains. There's no time limit.
To calculate your capital gains you will add the expenses, plus expenses of the sale to the fair market value of the property on day inheritance and you deduct it from the sales price. If the result is a loss and the property was used for personal purposes (not business or investment), you will not be able to claim the losses but you will still have to claim the capital gains, if any.
Not exactly. When you sell the property you will have to figure out capital gain or loss. You will use your expenses to reduce the sales price. There's no time limit how far back you can go to add the cost of improvements. If you owned the property for 10 years, than you can add cost of improvements for 10 year.
The expenses are not deducted or capitalized/depreciated separately. The expenses are used to reduce your capital gains on the sale of the property.
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